Threatening punitive US car industry trumps Trump with flattery
- Donald Trump is still considering charging tariffs on automobile imports. He wants to protect the local economy.
- However, the US auto industry is threatening to collapse its entire business model should Trump make his threats true.
- It forms tentative resistance – permeated by all sorts of submissive flattery.
If the top executives of the US economy have learned one thing in the past 18 months, then it’s the realization that there’s only one way to convince Donald Trump of anything: submissive flattery. And so it is no wonder that the letter to the “dear Mr. President”, with the same as seven associations of the American auto industry but want to prevent the introduction of tariffs on car imports after all, is so drunk with love.
“We know that you are a strong advocate of the American auto sector,” it says right at the beginning of the letter. “And we know how important it is for you to ensure that new cars remain affordable and Americans can buy them.” In the name of the nearly ten million employees of the industry and all customers could therefore only say: “We thank you.”
The demonstrative Katzbuckelei has a good reason, because for the auto industry is currently no less at stake worldwide than their entire business model. Should Trump actually impose taxes on car imports into the United States of up to 25 percent, international supply chains would be cut and investment decisions in low-wage countries made absurd. Above all, the export-strong German car companies would be affected – but also their US competitors General Motors (GM), Ford and Fiat Chrysler, which Trump wants to protect with the tariffs actually from foreign competition. Even the “Big Three” from Detroit make a significant portion of the cars they sell at home in the US, manufacture abroad, preferably in Mexico. But that’s one of those facts that you do not want to rub in the head of the excitable president all too often – so flattery.
German car industry warns Trump
The corporations urge the president not to impose punitive tariffs. Trump meanwhile, harsh criticism of the EU penalty against Google.
For this Thursday, the Department of Commerce had summoned a total of 46 representatives of affected companies, associations, unions and states to an almost nine-hour hearing in Washington to listen to their concerns or, even better, assure their support. Also Bernd Mattes, the former Germany boss of Ford and new president of the federation of the automobile industry (VDA), got in the evening about ten minutes speaking time. Unlike his US counterparts, he had decided not to spend too much time courtesy, but to get down to business quickly. The German auto industry, he said right at the beginning, was by no means a threat to US national security, as Trump claims. On the contrary, over the decades she has “proven that she is an integral and indispensable part of the US economy.”
In fact, German manufacturers and suppliers operate more than 300 factories and research centers in the United States, employing more than 100,000 people. Each year, 800,000 “German” cars are produced in the USA, the largest “American” car exporter is BMW. But these are facts that Trump does not focus on. He considers it rather “unfair” that significantly more German cars are on the roads of America than vice versa. That the president did not have the best reputation for a long time, the President fades as well as the fact that the large, gas-guzzling SUVs that GM, Ford and Chrysler build with so much success are unattractive to many German customers.
But even in the US itself is growing to hear the Ministry of Commerce, the resistance to Trump’s plans. In addition to the protesting associations, representatives of the auto union UAW as well as members of the congress of both parties wanted to speak at a joint press conference on Thursday. 149 members of the House of Representatives have signed a bipartisan letter warning of the imposition of auto-customs duties. And influential Republican Senator Orrin Hatch even announced a law that would massively curtail the president’s powers in trade policy should Trump not turn down. And yet, whether the misguided will succeed, is very questionable.
Many sports utility vehicles produced by BMW and Daimler in the United States go to China
The German auto companies are following the development with a mixture of concern and appeasement. Porsche CFO Lutz Meschke sees the looming tariffs somewhat relaxed. “We have very loyal customers and many fans in the US,” he says. In fact, the US has the largest Porsche fan clubs in the world, and its members are considered to be so wealthy that they are not hurt by price increases. Nevertheless, Meschke also expects sales to fall if the tariffs come. He excludes a move of the production to the USA: “With our relatively small quantities it is not economical to build up our own production capacities in the USA or China.”
The tension at the neighboring Stuttgart carmaker Daimler is much larger: In June, the group released a profit warning, because China in response to Trump’s duties now in turn 40 percent penalty duty on cars from the United States levies – this applies in particular sports SUVs from Daimler, but also BMW. Daimler produces its large off-road vehicles in Tuscaloosa in the US state of Alabama. Much of it is exported to China.
At BMW, the situation is similar. Most models that BMW produces in America are only produced there. Therefore, the manufacturer can not easily handle the Chinese punitive tariffs by delivering the same models from Europe to China. VW also manufactures sport SUVs in the US. But the group also has some factories in China, with which it can escape the Chinese punitive tariffs, at least for the models produced there.